Product packaging communication methods

A-Level: Business Studies

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Having said that tighter legislations are applied to protect the environment, Australian governments have also contributed in the action to reduce waste by encouraging material efficiency, reusing and recycling discarded materials. In order to control product packaging in Australia, the Australian government has implemented the National Packaging Covenant (NPC) since 1999 (Australian Government, 2009). The purpose is to minimize the usage of paper packaging, and use recoverable material packaging instead, as well as encouraging the purchase of products which incorporate recovered materials. In total, there are 732 companies operating in Australia who have signed the covenant (NPC Action Plan, 2008-2010).








Cosmetics and Toiletry Retailing Industry Background

In the international market, Australia is well-known to have organic and natural products, especially under the industry of cosmetics and toiletry. This is due to the fact that Australia possesses varieties of climate conditions which are excellent to grow raw materials for cosmetics. In addition, Australian is also well-known for its anti-ageing products and sun-protection products (Australian Government, 2009).
According to IBISworld (2009), the growth of this industry in terms of total revenue is slowing down. The revenue on 2008 is stated, $ 2,026 million, as it increase to $ 2,135 million on 2009, however, the growth rate of revenue decreased by approximately up to 2% comparing to previous years.

The determinants of the demand of this industry are mainly affected by the socio-economic as well as demographics factors of consumer. In addition, it is stated that consumers also tend to choose products which contains natural ingredients, vitamins and minerals (IBISworld, 2009). It does not state whether environmental packaging will affect the demand of the consumers, however, it can be assumed that consumers will tend to prefer an environmentally friendly packaging comparing to not environmentally friendly.
The barrier of entry to the industry is considered to be medium which causes a lot of new players such as red earth and lush to enter the market. This leads to the competition of this industry to classify as medium and increasing. Under this competition, companies compete on the basis of image, price, range and quality of product, level of service provided, and location. This makes advertising to play an important role in this competition (IBISworld, 2009). However, environmental influence such as using environmentally packaging can also be taken into account since it is assumed to provide a competitive advantage (Rundh, 2009).
According to a report by Prendergast & Pitt (1996), the cost of packaging is approximately 10% of the overall cost of the product. Different from other industries, the cost of packaging for cosmetics and perfume industries is roughly 40% of the overall cost of the product. Considering environmental packaging as a competitive advantage, packaging under this industry would be very costly. This means, if consumer does prefer environmental packaging, not all new players could penetrate the market due to the competition for environmental packaging. Therefore, this will create a new barrier of entry.
This market is segmented into products which include bath and shower skin care seizing 28% of the market, hair care, colour cosmetics, and others.
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